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Alameda took 1B hit in mobileCoin trade to prop up FTX
- temp_account_32 4y agohttps://archive.ph/ATPHq https://archive.ph/ATPHq
- kalimanzaro 4y agohttps://archive.ph/cPXEf https://archive.ph/cPXEf
- dpflan 4y agoI find the collapse, the PR, puff-pieces, SBF chatting away during NYT DealBook summit, celebrities white-washing to be incredible to watch. I am wondering how large the impact is on investors: Why is Bill Ackman talking about how cool Helium is within the last month? It does seem like a (last?) gasp for reassurance and hence liquidity for the larger/st investors involved in cryptocurrency/web3 madness. How much money is being lost that desperation is required to pump the ponzi still...
- negamax 4y agoGood point. Also Cathy Wood suddenly buying more $COIN and $GBTC seems like similar forces at play. Many are caught off guard and seem to have lost big on paper
- dpflan 4y agoIndeed, the compound growth required for BTC to reach Wood's $1M target by 2030 from where it is now, seems incredibly unlikely...
- inasio 4y agoI didn't know she ended up picking up McAfee's torch. Hopefully she skipped the pledge.
- louloulou 4y agoYeah, she didn't really pick up the torch with the same flare https://twitter.com/dergigi/status/1597721460784582657 https://twitter.com/dergigi/status/1597721460784582657
- skippyboxedhero 4y agoCathie Wood is another version of SBF. She has repeatedly said stuff that is obviously false. Even worse, she has actually demonstrated that her staff also have no idea what they are doing. It isn't possible to go full-FTX with a long-only fund...but there is further downside.
- gitfan86 4y agoThey are all trying to frontrun the next boom cycle in hopes of having good returns for 2023. Their returns for 2022 are garbage. Can you imagine giving ARK 1% of your wealth as payment for them losing 60% of your wealth? Their hope is that the fed cuts rates in early 2023, and that causes a ton of money on the sidelines to come back into the market into speculative assets.
- throwup 4y agoThe interesting thing is that FTX had almost no retail customers in the US[1], yet most of the coverage has been US-focused, due to the VC investors and US political donations. It really was just investors (in the company itself) that got hit the hardest. It just goes to show how easy it is to buy media coverage. If the media talked about things that affected their readers rather than their owners, the FTX news cycle wouldn't have lasted one day before everybody moved on. [1]: https://cdn.i-scmp.com/sites/default/files/d8/images/canvas/2022/11/23/07a8c476-890e-49fc-a54c-e6436ed40a84_ca3af8ce.jpg https://cdn.i-scmp.com/sites/default/files/d8/images/canvas/...
- benjaminwootton 4y agoAs I post on many threads, I have barely heard a single story about retail losing money on FTX, whereas I personally knew a handful who lost money with LUNA. I assume institutions are holding the vast majority of the bags here.
- hi5eyes 4y agocommon joke amongst ct natives is that left curves got rekt in luna, while right curves got rekt in ftx. interesting to see it commonly admitted by corresponding market participants
- pavlov 4y agoFascinatingly cryptic comment. My best guesses don’t map to anything intelligible. Connecticut natives? Left curve of the what exactly?
- v64 4y agoCT = Crypto Twitter, and it's referencing the midwit meme [1] [2]. [1] https://knowyourmeme.com/memes/iq-bell-curve-midwit https://knowyourmeme.com/memes/iq-bell-curve-midwit [2] https://twitter.com/notfrydoteth/status/1590386451027746817 https://twitter.com/notfrydoteth/status/1590386451027746817
- 4y ago
- candiddevmike 4y agoMy new conspiracy theory is all of the smaller coins were an easy way to extend the Ponzi scheme by inventing valuation out of thin air. Now that those have been unmasked and everyone's asking hard questions around liquidity or pulling their coins into their own wallets, the major players are over leveraged to the gills (because you can't make "real money" on customer money without risky bets). The only way out is to get BTC's price back to the good ol days and keep the Ponzi going.
- onlyrealcuzzo 4y ago> My new conspiracy theory is all of the smaller coins were an easy way to extend the Ponzi scheme by inventing valuation out of thin air. I don't think this is a conspiracy theory... At the very least, we know that some of largest institutions were regularly pumping up assets for solvency reasons.
- balderdash 4y agoThat’s why in “legacy” (stocks/bonds/futures) risk/portfolio management side not only is there a market quote next to your position, but also #of trading days at x% of avg. daily volume to exit…and as a supervisor/risk manager you’re going to assign a lot of risk to that illiquid position (regardless of where the “price” is)
- EMM_386 4y ago> My new conspiracy theory is all of the smaller coins were an easy way to extend the Ponzi scheme by inventing valuation out of thin air. That's exactly what happened. I invent $GRBG coin, reserve 1 billion of them, and sell 1 to my friend for $1. Boom, $1 billion "market cap". Then you wash trade between each other, raising the price enough so the suckers start to notice, and then cash out at the top.
- bombcar 4y agoI suspect the strange news/media outfall is because nobody quite knows yet WHO is at fault and since the money lost is from larger investors, they themselves are perhaps worried that they are at fault somehow, so there's really no "narrative" at play. Something similar happened during the implosion of the mortgage crisis; it wasn't clear how the contagion had spread until later.
- a11yclub 4y agoI personally think all of crypto is a scam but bitcoin, anyone who plays with alt-coins is just trying to get rich quick... You could say the same for bitcoiners, but it I think it's different.
- zampano 4y agoWhat makes bitcoin different other than it being older than the rest of the pack?
- qotgalaxy 4y ago
- rahen 4y agoBitcoin is the only currency that's leaderless, decentralized, belongs to no company or some 30 years-old "CEO", and is contributed to much like the Linux kernel. You could compare it to TCP/IP versus proprietary protocols du jour. Or just Google "what sets bitcoin apart to other cryptos". https://bitcoinmagazine.com/culture/what-makes-bitcoin-different-from-crypto https://bitcoinmagazine.com/culture/what-makes-bitcoin-diffe...
- deleted 4y ago[deleted]
- jgalt212 4y agoThe Ponzi can keep going for a while. The Fed Balance Sheet is still within 95% of its all time high. These huge asset price moves are more a function of investor preferences and people trying to get in front of the Fed rather than there being a lot less money around. The (real) Art Market, for example, still seems quite healthy. https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
- TacticalCoder 4y ago> I find the collapse, the PR, puff-pieces, SBF chatting away during NYT DealBook summit, celebrities white-washing to be incredible to watch. What I find way more incredible is that we've got someone who committed many crimes: wire fraud, running ponzis, pumping and dumping shitcoins which were considered for some as securities, funneling money out of the US to the Bahamas using tens if not hundreds of companies, naming his company "Alameda Research" to dodge banking restrictions, lying up until the very last moment when things blew up that everything fine, lying about US customers deposits being FDIC insured, bribing people (several people came out and said SBF downright offered them $1m to paint FTX in a positive light), using the stolen money to buy properties in the Bahamas to the tune of $300m, etc. And yet... This is resumed by many with: *"Cryptos are all ponzis". What's the reasoning? Everybody in crypto is a fraudster so investors and depositors all deserve to be wiped out by a scammer? And he should walk free? While the guy who wrote "tornado cash" is in jail? While Aaron Swartz got sentenced for putting online research papers (paid with taxpayers money btw)? Is that what you're saying? That's it's all a gigantic fraud so it's on par for the course and SBF is not worse than the guy who bought two DOGE and three SHIBA INU coin?
- loeg 4y agoYou seem to repeatedly raise the idea that we can't or shouldn't use the FTX fraud and collapse to criticize the rest of the crypto space, or that doing so somehow excuses SBF. You are wrong on both counts.
- officialjunk 4y agoall the crimes sbf committed are "traditional" fraud and not dependent on there being crypto involved. we should still scrutinize and perform due diligence on all businesses, though, including crypto businesses.
- freejazz 4y agoWell, it's him doing them in the crypto space that has enabled the proliferation.
- 40acres 4y agoI don’t understand the criticism of the Dealbook interview. I want to hear SBF side and found that he’s definitely hanging himself with his public statements. If the media were to “deplatform” him that would be an incredible disservice. I thought ARS asked fair questions.
- dpflan 4y agoSure, he can mint himself enough rope, but the opportunity can give weight to a narrative that is desired, whatever it may be.
- benatkin 4y agoAh yes, mobilecoin. I haven't heard much about it since the Signal announcement. I hoped Signal reversed their decision but apparently not: https://support.signal.org/hc/en-us/articles/360057625692-In-app-Payments#payments_which_ones https://support.signal.org/hc/en-us/articles/360057625692-In...
- dmix 4y agoThe FTX trade happened in April 2021 and it looks like it was because the value of mobilecoin spiked and someone in FTX bet on it at a high price before it dropped. https://imgur.com/a/dgeaIzK https://imgur.com/a/dgeaIzK I don’t think this was some FTX investment directly to mobilecoin itself (they were buying coins, not loans/investment that would expose them to FTXs recent drop). Despite the headline making it seem that way. In the year plus since the Apr 2021 price spike mobilecoin price is pretty stable. So I’m not sure why Signal should drop them other than because of the general volatility in crypto.
- skorpeon87 4y ago> So I’m not sure why Signal should drop them other than because of the general volatility in crypto. The affiliation to a cryptoscheme casts the entirety of Signal in a disreputable light. Not least because it gets Signal tangled up in stories like this one.
- michaelteter 4y agoAccepting highly volatile assets as collateral seems obviously very risky for a lender/exchange. I wonder if SBF has a good knowledge of banking history. No doubt, there are examples in the past of banks making similar mistakes.
- bboygravity 4y agoIt wasn't a mistake, it was deliberate fraud.
- deleted 4y ago[deleted]
- gitfan86 4y agoLegally I think they are better going after the embezzlement angle instead of fraud. It is a fact that FTX funds were used to buy a house that his parents had in their name and that they used. SBF can say that the house purchase was an "accident" but most jurors understand that you don't just "accidently" have a house in your name that you live in.
- landemva 4y agoMaybe a prosecutor/IRS will offer his parents a deferred prosecution deal to spill the info about that house in their name. Either way the parents may lose their lawyering bar cards.
- dragonwriter 4y ago> Legally I think they are better going after the embezzlement angle instead of fraud. Legally, they aren’t mutually exclusive, and a part of what is probably making the criminal side take longer than people like is investigating the wide array of crimes that appear to have been committed and deciding how best to charge them.
- nullc 4y agoThe embezzlement portion seems relatively small compared to the overall claimed of losses. Stuff like the property will be recovered too. But the billion dollars transferred into the pockets of this mobileCoin trader on the other hand...
- deleted 4y ago[deleted]
- TheRealPomax 4y agoWhen they're both your own company, one didn't "take a hit" to prop up the other, you simply committed more fraud in order to try to hide the problem.
- sschueller 4y agoI just don't understand how you can expose yourself to such risk if you are supposed to be this super smart MIT graduate. I don't understand much about finance but if I had the CEO responsibility I would make damn sure I am not exposed like that. I just don't believe that it was an unfortunate event and SBF is innocent. How can you be so oblivious and I also think the top investors should be held accountable, they had to know the risk. Like with a terrorism charge you have the one committing the act and you also have the ones that aided and abeded. The enablers.
- NotYourLawyer 4y agoIt’s fine if you have automated margin calls every 30 seconds and you can blow out somebody’s position quickly enough not to lose money. Which is what FTX allegedly had set up… for every trader except Alameda.
- HDThoreaun 4y agoNo it's not really. It would not have been possible to sell the shit coin collateral for the amount loaned against it at any point. By the time FTX had liquidated half the collateral the coins liquidity would be gone and the rest of the coins would be worthless. There was no point in time where these loans were solvent, they were just pumped so they looked solvent on paper.
- NotYourLawyer 4y agoYeah, true. They probably shouldn’t have been accepting illiquid shitcoins as collateral at any valuation above zero.
- wmf 4y agoThey could calculate margin based on the liquidation value of collateral given the current state of the order book instead of mark-to-market value but I don't know if they did that.
- 4y ago
- s17n 4y agoSo if I'm understanding this correctly, a trader managed to: 1. Buy a bunch of mobilecoin, a thinly traded coin, below $10. 2. Single handedly pump the coin price to $60, due to the market's illiquidity 3. Instead of trying to sell at $60 (which wouldn't work because there wasn't actually a market for the coin), the trader simply borrowed dollars from FTX at the $60 value 4. The coin price eventually returned to $10 but the trader had effectively cashed out at a higher price by borrowing from ftx against the (now worthless) collateral 5. Presumably, the trader then simply defaulted on his loans to FTX and kept the money. Is this right? Crazy if true.
- TuringNYC 4y agoSounds right, but there is also point 5 5. Trader who borrowed ("cashed out") is now being margin called by lawyers who are managing the FTX bankruptcy. 6. Investigation of whether this was an insider deal to funnel away money from FTX, because no legitimate margin desk, CVA or MVA process would allow such a thing.
- notch656a 4y agoJust a guess for possible other steps: -1. They acquired fake/stolen KYC credential 0 . Their collateral was anonymized 7. The investigation fails to uncover who it was.
- super256 4y agoI mean, it wasn't even FTX who bought the bankrupt position, but Alameda. (since Alameda was the backstop provider) Bankrupt positions were usually sold for 1% under market price to backstops, so if mobile coin traded at 60 dollars and trader goes bankrupt, Alameda bought the position for 59.4 dollars per mobile coin (what a sweet deal!). The trade is done for trader. I am not convinced that if you go bankrupt, because you bought some GME at $120, you can go after the counter party who sold you GME at that price. (You can try, but it's some bad faith stuff). This trade underlines again why the commodities exchange act is so vital to the whole country, and shows just how crappy FTX liquidation model is. [1] Also, I really like trade because it's smart and funny. [1] CME Group CEO Terrence Duffy said it too! Here: https://youtu.be/V4SWraem1e0?t=2963 https://youtu.be/V4SWraem1e0?t=2963
- LatteLazy 4y agoAt this point I think we should stop pretending they were separate entities...
- JaggerFoo 4y agoThe article is short on details of the trade, mostly filler on already reported FTX downfall and other downfalls.
- Sandworm5639 4y agoVery weird, the information is not sourced at all and this is FT, not a random website. >Two people familiar with the matter said... who are they? Current/former employees/someone who knows that trader? Is this from some of the bankruptcy proceedings filed docs?
- turmeric_root 4y agogenerally this is used to protect the identity of sources
- bogomipz 4y agoThe article states: >"FTX lent to traders so they could make big bets on crypto with just a small initial outlay, known as trading on margin. If the traders made losses, FTX would automatically sell the cash or margin they had put up, thereby protecting the exchange." Can someone say what is meant by "sell the cash" here? I'm guessing this is not literal. Cash is an asset, what wouldn't they just deposit the cash in their account?